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BE13 Keynote Speaker

October 25, 2012 By 1 Comment

The keynote speaker for BuildingEnergy13 will be Alex Blumberg of NPR’s Planet Money and PRI’s This American Life. He will be speaking on “economics for environmentalists”.

As anyone knows who listens to his pieces on All Things Considered, Morning Edition, the Planet Money podcast , or any of the economics episodes that This American Life has broadcast (“The Giant Pool of Money” in particular), Alex presents and explains complex economics ideas with real wit and clarity.

I’m really excited about this. In my opinion, economics is a weak point within the NESEA community.

Some questions that I have mulled for some time that might make their way into Alex’s talk include these:

Carbon tax versus cap & trade. “Cap & trade” garnered much attention a couple years ago but has completely disappeared from the debate this election year. I realize in the current political climate, hoping for either cap & trade or a carbon tax is a delusional pipe dream. But the political climate might change as the global climate does, and the NESEA community should be prepared to advocate for good policy, which means we need to understand this issue closely.

The discount rate question. This boils down to trying to calculate how much it’s worth spending now to benefit ourselves—or our descendants—in the future. This question applies to a broad range of scales, from individual projects and buildings all the way to regional and national policy. Here’s a quick example of what “discount rate” is about, not to explain the concept but to communicate the consequences: Nicholas Stern (lead author of “The Stern Review on the Economics of Climate Change”) has advocated for a discount rate of 1.4%. Using this rate means that it’s worth investing $247 billion today to head off $1 trillion in damage 100 years from now. On the other hand, William Nordhaus, the Yale economist, has argued for a discount rate of 6%. Using this rate means that it’s only worth investing $2.5 billion today to head off $1 trillion in damage 100 years from now. Big difference, no? The discount rate question is huge, and we need to try to get a handle on it.

“The tragedy of the commons.” Garret Hardin introduced this concept to a wide audience in 1968, and it’s more relevant now than ever. The basic idea is that individuals, acting completely sensibly and in their own self-interest, can do serious damage to the common good and ultimately can sabotage their own well being through a series of otherwise completely rational acts. Nobel Prize-winning economist Elinor Ostrom has done some really interesting work on how to evaluate and manage the problem, work that’s more than germane to NESEA practitioners, and it would be interesting to get an accessible explanation of her theories.

Accounting for energy replacement costs. The Carbon Age has allowed people to benefit from cheap energy. That cheap energy will not last forever. Should the inevitable depletion and ultimate disappearance of fossil fuels have any impact on the price we pay for that energy now? Or can we just maintain the status quo and continue to ignore the issue?

The Jevons paradox. Mid-19th-century economist William Stanley Jevons observed that as England got more efficient at burning coal, England burned more coal rather than less. Odd, no? If we get more productivity from a unit of coal, shouldn’t we need to use less coal? Apparently, it doesn’t work that way. This is a potentially inconvenient idea for an organization of practitioners who advocate ever and ever more efficient use of energy, and we would benefit from understanding the concept and its applications and misapplications.

Can a growth economy be reconciled with lowered resource usage? Despite the hopeful thinking of many NESEA practitioners, it’s hard to avoid the conclusion that we face a choice between either achieving dramatic reductions in carbon output or maintaining historic levels of economic growth—we can’t have both. Or can’t we? I personally have a hard time imagining how we can move to more expensive, less portable and storable energy sources such as solar and wind and still maintain the same levels of economic growth we’ve enjoyed the last couple of centuries. But that may be a result of my own limitations.

On this, and my other questions, perhaps Alex Blumberg can shed some light and show me the error of my ways. I invite you to come to the keynote address next March 6th and find out.

Filed Under: BuildingEnergy Conference & Trade Show, NESEA Tagged With: , , , , , , , , , , , , ,

Videos on Sensible Climate and Energy Policy

April 25, 2010 By 1 Comment

The media page for the Price Carbon Campaign has several great videos available that explain from a wide variety of perspectives why a simple clear revenue neutral carbon tax is the best solution to climate, economic, environmental, employment and national security challenges that are all interrelated. Another important video is  “The Huge Mistake” by attorneys Laurie Williams and Allan Zabel which explains clearly why the solutions generally favored in Washington really are a huge mistake. Then there is this good summary of the issues from a forum sponsored by The Carbon Tax Center, Climate Crisis Coalition, Citizens Climate Lobby, Friends Committee on National legislation, Friends of the Earth, Progressive Democrats of America, The Clean Coalition, We Act for Environmental Justice and the Price Carbon Campaign.

For those who care seriously about these issues and do not want to see wasteful and ineffective solutions substituted for clear simple and real solutions, spending an hour or so watching these videos could be a great investment of your time. It would also be great for every member of the senate to watch them all prior to taking a position on legislation.

These videos provide compelling video regarding the fundamental problems of the  convoluted corporate welfare schemes like the Kerry Graham Lieberman bill now making its way to the senate. With clearly far better bipartisan bills already drafted, like the Cantwell Collins “Carbon Limits and Energy for America’s Renewal (CLEAR) Act” and the Inglis Flake Lipinski  “Raise Wages, Cut Carbon Act”, we can only hope that these clear messages of common sense have more impact than all the special interest lobbyists that generally drive policy in Washington.

Filed Under: US Legislation Tagged With: , , , ,

Climate Politics

March 26, 2010 By 5 Comments

To assure sustainable prosperity, we need the market place to account fairly for the long legacy of subsidy and economic externalities that distort energy markets in favor of incumbent polluting industries. We need to establish public policies that enable such accounting in a direct, transparent and dependable manner.

I have long been an advocate of a tax on incumbent energy resources. There are compelling national security, economic and environmental reasons for a revenue neutral tax that shifts taxation away from productive activities like creating jobs, and instead taxes polluting, non-renewable energy resources. Such a strategy could win broad based support across the political spectrum.

But I believe the focus on climate change, favored by many in the environmental movement, is a significant liability in the political effort to create sensible energy policy. Recently, my apprehensions regarding such focus have been proven well founded.

When it comes to addressing climate issues through public policy, there are a wide spectrum of views which, while not supporting the recent policy orthodoxy of climate politics, are not based on denial of the issue or its potential ramifications. Many people recognize that current politically favored solutions to climate change would not only be ineffective, but could potentially create worse problems then those they are intended to address.

Those advocating for complex convoluted public policy responses to the threats of climate change have seen serious setbacks over the last few months, not the least of which was the failure of the Copenhagen conference to achieve any meaningful results.

It is also becoming more clear recently that the science of climate change is being heavily influenced by political agendas. But contrary to the concerns of many in the environmental movement that it is “right wing” interests which are corrupting the science, it appears that it is largely those pushing an agenda of climate change alarmism who have had the most significant influence on the scientific reporting.  Crony capitalists have been more than willing to go along as the politics of climate have been co-opted by Wall Street interests and others who stand to benefit immensely from the convoluted economic distortions embedded in solutions to climate change now favored by many politicians.

Especially since the release of e-mails and other documents from the University of East Anglia Climate Research Unit in November, the press and public have become more skeptical on the issue and there have been increasing numbers of questions raised regarding the quality of the UN sponsored 2007 IPCC Fourth Assessment Report on Climate Change.

Respected conventional news outlets of all political persuasions, many of which have in the past been supportive of an aggressive climate policy agenda, have been publishing articles and editorials with titles like: Climate change: this is the worst scientific scandal of our generation ,  ClimateGate: Was Data Faked? , How Climate-Change Fanatics Corrupted Science , The Death of Global Warming , UN wrongly linked global warming to natural disasters , Conning the climate: Inside the carbon-trading shell game , Alarmists’ credibility melting , How Wrong Is The IPCC? and What happened to global warming?

Though here in the US the traditional press has been less prone to cover the story than in Britain, Australia, India and elsewhere, there is increasing controversy regarding many of the findings in the 2007 IPCC Fourth Assessment Report, which won its authors the Nobel Prize along with Al Gore. Of most concern in the report are elements of the Summary for Policy Makers.

It has been reported than when asked in advance of publication to review the draft of the summary for Chapter 9  which attributes global warming to man made causes, Dr. Andrew A. Lacis, a climate researcher at the NASA Goddard Institute for Space Studies had this to say:

“There is no scientific merit to be found in the Executive Summary. The presentation sounds like something put together by Greenpeace activists and their legal department. The points being made are made arbitrarily with legal sounding caveats without having established any foundation or basis in fact. The Executive Summary seems to be a political statement that is only designed to annoy greenhouse skeptics. Wasn’t the IPCC Assessment Report intended to be a scientific document that would merit solid backing from the climate science community – instead of forcing many climate scientists into having to agree with greenhouse skeptic criticisms that this is indeed a report with a clear and obvious political agenda. Attribution can not happen until understanding has been clearly demonstrated. Once the facts of climate change have been established and understood, attribution will become self-evident to all. The Executive Summary as it stands is beyond redemption and should simply be deleted.”

Dr. Lacis suggestion was unfortunately rejected. It is now coming out that significant portions of the IPCC report were not based on peer reviewed science at all and several findings of the report have been confirmed to be erroneous.

Public support for action on climate change is waning.  A study from Yale University offers an interesting analysis of attitudes on the subject. The Pew Research Center shows climate change being a very low public priority.

A good friend of mine and passionate advocate for climate change policy action suggested that:

“The surveys and editorials are interesting reflections of public opinion, but they don’t undermine the science.  Don’t forget that a little over half of Americans don’t believe in evolution either.”

But contrary to Al Gore’s proclamations and the views of many people I respect, the science is not settled. Some evidence of that is the Petition Project, which claims the signatures of 31,486 American scientists who have all endorsed a petition that states:

“There is no convincing scientific evidence that human release of carbon dioxide, methane, or other greenhouse gasses is causing or will, in the foreseeable future, cause catastrophic heating of the Earth’s atmosphere and disruption of the Earth’s climate. Moreover, there is substantial scientific evidence that increases in atmospheric carbon dioxide produce many beneficial effects upon the natural plant and animal environments of the Earth.”

Dr. Judith Curry, the Chair of the School of Earth and Atmospheric Sciences at the Georgia Institute of Technology recently wrote:

“No one really believes that the “science is settled” or that “the debate is over.” Scientists and others that say this seem to want to advance a particular agenda. There is nothing more detrimental to public trust than such statements.”

Personally I feel absolutely certain that humans must be having some influence on climate, just based on the scale of influence that 6.8 billion people have on everything on the planet. Very few people would disagree with that premise. But clarifying how the many human and natural factors impacting climate will interact, how those factors will manifest themselves in complex climate systems, how significant our human influence will be and whether changes will have positive or negative impacts on agriculture and other critical aspects of human society, are all determinations that unfortunately are outside any clear understanding or real consensus in the scientific community at this time.

Perhaps most significant of the recent clarifications regarding the science of climate change has been the BBC interview with Phil Jones, who was the director of the University of East Anglia Climate Research Unit.

When asked: Do you agree that from 1995 to the present there has been no statistically significant global warming: Dr. Jones answered a qualified “yes”.  In details supporting his answers, he showed that the warming trend from 1995 to 2009 of 0.12 degrees centigrade per decade is matched by the cooling trend of 2002 through 2009 of -0.12 degrees centigrade per decade.

In discussing the warming periods:1860-1880, 1910-1940, 1975-1998 and 1975-2009 Dr Jones states clearly that:

“the warming rates for all 4 periods are similar and not statistically significantly different from each other.”

When asked : when scientists say the debate on climate change is over, what exactly do they mean – and what don’t they mean? Dr. Jones answered:

“It would be supposition on my behalf to know whether all scientists who say the debate is over are saying that for the same reason. I don’t believe the vast majority of climate scientists think this. This is not my view. There is still much that needs to be undertaken to reduce uncertainties, not just for the future, but for the instrumental (and especially the palaeoclimatic) past as well.”

His answer on the so called Medieval Warming Period from 800–1300 AD makes clear that current levels of scientific understanding of historic climate data can’t determine conclusively if warming trends since the industrial revolution are unique or unusual.

Recently, Tom Ward, the publisher of the Valley Breeze, a local newspaper here in Rhode Island, published an editorial entitled Inconvenient truth. In it, he suggested that:

“Climate change, formerly known as ‘global warming,’ is a fraud. The science is junk.”

One member of an environmental organization I am involved with issued a call to respond suggesting:

“Some might say its hopeless to answer such extreme positions, but the far right-wing repeats similar stuff every day on cable, talk radio and the like.”

I pointed out to the group that while his rhetoric is harsh, the important conclusion of his editorial is something we can all largely support when Mr. Ward suggests:

“As Americans, we must embrace energy conservation in the short term, and generate more home-grown nuclear, natural gas and wind power in the longer term, to keep our money here and create tens of thousands of well-paying jobs. With those goals achieved, we can power our cars and trucks with U.S.-made electricity and natural gas, and stop sending $800 billion a year overseas, money that funds our enemies.”

While I strongly disagree with Mr. Ward regarding nuclear power (a subject for another posting), I fully agree with him on conservation, wind energy and on using natural gas as the critical transition fuel on our way to a clean energy future.

If the environmental community embraced the energy independence, national security, economic development, employment and balance of trade arguments that Mr. Ward champions, we could be much further along in addressing the challenges of climate change than we are today.  Instead of condemning them, we should be reaching out to potential strong policy allies like Mr. Ward who, like most Americans, would favor rational energy policy.

As I have suggested here before, everything that Mr. Ward argues for could be achieved through a Pigouvian tax on non-renewable energy resources.  That solution would actually be effective in directly and immediately curbing carbon dioxide emissions, unlike the leading solutions being pushed in Congress. If we all embraced the idea that such tax should be 100% revenue neutral, offsetting payroll taxes and income taxes that discourage job creation and working,  Americans of all political persuasions would support such solutions as prudent economic, jobs  and tax policy.

It is not smart politics to be looking for enemies among our potential friends. Rather than blaming the “right wing” or “a well-funded disinformation machine” for the lack of progress, we should take responsibility for the narrow partisan political strategy of the environmental community on these issues.

If the climate change rhetoric from the environmental community were less extreme, it wouldn’t provide such tempting targets for ridicule and harsh criticism and we wouldn’t see the backlash we have. We don’t need to blow the scariest possible outcomes for climate change out of proportion in order to gain broad based political support for effective measures to curb carbon emissions. In fact, overblown climate rhetoric from the environmental community has significantly set back political prospects for sensible energy and climate policy.

The IPCC  has done significant disservice to those concerned with climate change by becoming an imprudent advocate rather than the professional scientific organization that it was chartered to be.

Environmental scientist, James Lovelock is the author of the original “Gaia Hypothesis”, the theory of how the earth’s interrelated feedback mechanisms act as an integrated single organism. He has been described as “The Prophet of Climate Change” . He offers some important perspective:

“I think you have to accept that the skeptics have kept us sane — some of them, anyway. They have been a breath of fresh air. They have kept us from regarding the science of climate change as a religion. It had gone too far that way. There is a role for skeptics in science. They shouldn’t be brushed aside. It is clear that the angel side wasn’t without sin.”

Phil Jones, Andrew Lacis, Judith Curry, James Lovelock and other reputable climate scientists have come to realize that it is best to clearly and honestly present known facts along with the uncertainties surrounding this very complex science. Its about time the rest the environmental community does too.  We should accept  the political reality that with current levels of actual scientific understanding and consensus, most rational people would be reluctant to totally transform the world economy or create the worlds largest derivatives game for Wall Street in convoluted schemes like Cap, Trade and Offset.

I expect that acknowledging the scientific uncertainties regarding the long held beliefs of many of my friends in the environmental movement may result in some calling my integrity and intentions into question. The best answer I can offer them is that unlike those supporting ineffective convoluted answers currently favored in Washington, I am serious enough in my concern on these issues to advocate for policy solutions like H.R. 2380, The Raise Wages, Cut Carbon Act that puts an immediate, real and dependable price on carbon emissions. That bipartisan legislation would also address our economic and unemployment problems as well as our energy and environmental concerns and it wouldn’t add a penny to our monstrous federal debt. That’s the kind of solution the vast majority of Americans would support and that credible politicians should also support if they are really more serious about solving problems than they are about handing out pork to their special interest benefactors.

All the reasons Tom Ward cites in encouraging our nation to move to a clean energy economy have been more than adequate inspiration to spend my career doing green building and renewable energy work for the last three decades. Terrorism funded by our exported petro-dollars, pollution, the economic mess our oil dependency has helped cause, the war in Iraq and our other military adventures to secure oil supplies,  and all the other symptoms of our fossil fuel dependency are plenty of inspiration for good policy.

Effective public policy response to climate change and all those other challenges would be clear, simple and easily understandable by everyone so that everyone participating in the economy can anticipate impacts and respond in rational ways.  All these inter-related issues are too important for the typical corrupt political horse trading between politicians and lobbyists we have come to expect from Washington. We need real leadership at the grass roots level advocating for sensible policy.

Rational climate policy wouldn’t be based on adding vast new convoluted complexities to the economy that are easily vulnerable to the distortions of Wall Street’s financial engineering manipulations. Nor would they be based on legislators and bureaucrats anointing winners and losers in the economy. Instead we need the kind of policy that directly puts a real and dependable price on the “economic externalities” that are currently hidden subsidies for incumbent energy industries – a revenue neutral carbon tax.

Its far past time for everyone concerned with climate change to seek out alliances around sensible energy policy by focusing on the issues that all Americans can readily agree on.  We should align our political agenda with those who are more concerned with other issues like the economy, jobs, trade deficits, national security, terrorism and our government’s unsustainable ballooning levels of debt and unfunded liabilities. Effective solutions to climate concerns can also address all those issues and should be politically framed to do so in a manner that appeals across traditional political boundaries. This shouldn’t be a partisan or politically divisive issue. We need a broad political coalition which will only be achieved by being far less dogmatic about our politics.

The most prudent and sensible advice I have seen regarding the politics of climate policy is from Mother Jones magazine, which quotes a perhaps unexpected ally, Republican pollster Frank Luntz:

“It doesn’t matter whether you call it climate change or global warming,” he said. “The public believes it’s happening, and they believe that humans are playing a part in it.” In fact, Luntz warned that if Republicans continue to dispute climate science it could hurt them politically. Instead, he said, the GOP should be engaging in the debate over how to solve America’s energy problems……….

Luntz suggests less talk of dying polar bears and more emphasis on how legislation will create jobs, make the planet healthier and decrease US dependence on foreign oil. Advocates should emphasize words like “cleaner,” “healthier,” and “safer”;  scrap “green jobs” in favor of “American jobs,” and ditch terms like “sustainability” and “carbon neutral” altogether. “It doesn’t matter if there is or isn’t climate change,” he said. “It’s still in America’s best interest to develop new sources of energy that are clean, reliable, efficient and safe.”

Luntz’s polling suggests  The First Rule of Fighting Climate Change: Don’t Talk About Climate Change.

Filed Under: Renewable Energy, US Legislation Tagged With: , , , , , ,

James Hanson On Copenhagen

November 27, 2009 By Leave a Comment

Newsweek is out with a good interview of world famous NASA Climate Scientist James Hanson regarding Copenhagen and the recent release of controversial e-mails from the Climate Research Unit at the University of East Anglia.

Hanson brushes off the significance of the dust-up over the e-mail release:

Do the e-mails indicate any unethical efforts to hide data that do not support the idea of anthropogenic global warming or to keep contrary ideas out of the scientific literature and IPCC reports?

They indicate poor judgment in specific cases. First, the data behind any analysis should be made publicly available.  Second, rather than trying so hard to prohibit publication of shoddy science, which is impossible, it is better that reviews, such as by IPCC and the National Academy of Sciences, summarize the full range of opinions and explain clearly the basis of the scientific assessment.

On the question of Copenhagen and current US policy , Hanson is even more clear:

How serious a setback would it be if no agreement on a climate treaty is reached in Copenhagen, where 192 countries are meeting starting Dec. 7?

It’s not a setback at all if it allows a careful reassessment of what is needed. The cap-and-trade scheme [that the Copenhagen negotiations were working toward] is just not going to be effective at controlling greenhouse emissions. Political leaders have to realize that the fundamental problem is that fossil fuels are the cheapest form of energy, so they will continue to be burned unless we put a gradually increasing price on carbon emissions [through a carbon tax]. That’s a much better approach than national goals for emissions reductions, which will probably not be met.

What do you think of the climate bills now before Congress?

They’re disasters. We can’t allow the polluters to write the bill, but that’s what happened. What’s needed is putting a price on carbon, not cap-and-trade.

Hanson is even more clear in his editorial about Copenhagen in The Guardian “Is There Any Real Chance of Averting A Climate Crisis?” in which he suggests:

Absolutely. It is possible – if we give politicians a cold, hard slap in the face. The fraudulence of the Copenhagen approach – “goals” for emission reductions, “offsets” that render ironclad goals almost meaningless, the ineffectual “cap-and-trade” mechanism – must be exposed.

I can’t agree with Hanson when he calls for increased use of nuclear energy, for all the reasons cited here.

But in general, Hanson has it exactly right on how to address climate and energy issues through public policy – put a real price on fossil fuels through the tax system and offset that tax with reductions in regressive taxes like the payroll tax which stifle our economy and discourage jobs creation.

Hanson is absolutely right in his assessment of  on our current policy efforts in Congress and on his hopes for Copenhagen.

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Ninety Years Of Progress – 3 MPG

August 22, 2009 By 9 Comments

New Scientist reports a pretty amazing set of statistics in “US vehicle efficiency hardly changed since Model T “:

“The average fuel efficiency of the US vehicle fleet has risen by just 3 miles per gallon since the days of the Ford Model T, and has barely shifted at all since 1991.”

“Those are the conclusions reached by Michael Sivak and Omer Tsimhoni at the University of Michigan Transportation Research Institute in Ann Arbor. They analyzed the fuel efficiency of the entire US vehicle fleet of cars, motorcycles, trucks and buses from 1923 to 2006.”

“They found that from 1923 to 1935 fuel efficiency hovered around 14 mpg (5.95 km/l), but then fell gradually to a nadir of only 11.9 mpg (5.08 km/l) in 1973. By 1991, however, the efficiency of the total fleet had risen by 42 per cent on 1973 levels to 16.9 mpg (7.18 km/l), a compound annual rate of 2 per cent.”

“Progress has stalled since then, though, despite growing environmental concerns. From 1991 to 2006 the average efficiency improved by only 1.8 per cent to 17.2 mpg (7.31 km/l).”

After all the good intentions of politicians and environmentalists, all the legislation, all the regulation, for all those years – one has to wonder if a simpler solution might have made more of an impact on fuel economy. If instead of micromanaging the auto industry with mandates, congress had instead tried taxing petroleum to account for the “economic externalities” of our fossil fuel addiction, consumers might have placed some value on efficiency and we wouldn’t have squandered a precious resource while despoiling our environment. And we perhaps wouldn’t have lost the American auto industry to competitors who recognized the value of both efficiency and competitive enterprise.

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Waxman Markey – Legislating Guaranteed Failure

July 1, 2009 By 5 Comments

In his July 1 editorial, “Just Do It”, Tom Friedman is exactly right when he says regarding the recently passed Waxman Markey climate bill: “It is too weak in key areas and way too complicated in others. A simple, straightforward carbon tax would have made much more sense than this Rube Goldberg contraption. It is pathetic that we couldn’t do better. It is appalling that so much had to be given away to polluters. It stinks. It’s a mess.”

He goes on to describe some of the completely counterproductive compromises made to buy votes for the bill that will in aggregate absolutely guarantee that the bill fails to provide any of its climate related goals.

But he really misleads the American people in describing Republican opposition to this massive pork barrel bill in saying: “What are Republicans thinking? It is not as if they put forward a different strategy, like a carbon tax.?”

In fact, two Republicans Representatives Ingliss and Flake along with their Democratic colleague Daniel Lipinski have proposed H.R. 2380, The Raise Wages, Cut Carbon Act of 2009, which is exactly the solution that Friedman has been advocating for several years. It puts real inescapable prices on carbon emmission starting immediately, that are far greater then the EPA and Congressional Budget Office estimate Waxman Markey will provide ten years from now. And it helps the economy by reducing payroll taxes, the most regressive form of taxation in the country, rather than handing out hundreds of billions in corporate welfare the way Waxman Markey does.

Sadly, instead of providing the real leadership the nation needs and serious solutions like the Ingliss bill, Friedman caves in after years of being a true leader on these matters by calling on the Senate to push forward the wasteful and completely counterproductive corporate pork that the House just passed.

Greenpeace has chosen to take a far more practical and principled stand suggesting: “As it comes to the floor, the Waxman-Markey bill sets emission reduction targets far lower than science demands, then undermines even those targets with massive offsets. The giveaways and preferences in the bill will actually spur a new generation of nuclear and coal-fired power plants to the detriment of real energy solutions. To support such a bill is to abandon the real leadership that is called for at this pivotal moment in history.  We simply no longer have the time for legislation this weak.”

In their Philadelphia Enquirer editorial entitled “Cap-and-Trade Does More Harm Than Good”, public sector environmental attorneys Laurie Williams and Allan Zabel with experience in California’s Cap and Trade law start by stating: “We would support legislation in Congress to address climate change if it were capable of accomplishing that goal. Unfortunately, despite the best intentions of its proponents, the bill known as Waxman-Markey would disable our ability to reduce greenhouse-gas emissions for at least a decade”

After clarifying several of the fundamental reasons this legislation will completely fail to meet its purported goals, they go on to conclude: “The Waxman-Markey approach would not only guarantee a decades-long failure in the United States; it would also undermine U.S. credibility in international negotiations on climate change.”

“Those who favor Waxman-Markey as a political best-case scenario lack faith in the American people. We believe the American people can understand and support a more effective and fair approach.”

“Many observers across the political spectrum agree that carbon fees or taxes, with rebates to consumers, would be a more enforceable and effective alternative. While cap-and-trade-and-offsets will enrich special interests and delay the transition away from fossil fuels, carbon fees with monthly rebates could be the centerpiece of an affordable, equitable, rapid transition to a clean-energy future.”

White House Budget Director Peter Orszag was absolutely clear in his March testimony to Congress said: “If you didn’t auction the permit, it would represent the largest corporate welfare program that has ever been enacted in the history of the United States”.

By giving away 85% of the credits, offering completely unverifiable offsets for all sorts of sheer nonsense, and removing the EPAs role in regulating greenhouse gasses, Waxman Markey will do more to set back any real solutions than just about any policy imaginable.

In “The Cap and Trade Giveaway” Alan Viard  suggests “under a system of free permit allocation, the stockholders of companies that receive free permits would receive windfall gains. A cap-and-trade system with freely allocated permits is equivalent to a carbon tax in which the tax revenue is given to stockholders.”

Is this corrupt pork barrel corporate welfare really the best Congress can do? Do they really think nobody is paying attention, when after giving trillions of dollars in direct and hidden subsidies to the “too big to fail” banks at the center of the global financial meltdown, they are now handing out hundreds of billions more to the companies most responsible for the environmental problems facing the planet. Do they cynically think we citizens are all just stupid or that nobody is paying attention to what they do? Is empty rhetoric really all that is needed to buy  support of most of the mainstream environmental organizations and cover up such a total failure of Congress?

Friedman is right in his conclusion that “We The People” are the only hope for a real solution with his call to “get out of Facebook and into somebody’s face. Get a million people on the Washington Mall calling for a price on carbon. That will get the Senate’s attention. Play hardball or don’t play at all.”

But he is completely wrong to suggest that we should accept and promote the corrupt politics currently masquerading as a solution to anything at all. The massive fraud being perpetrated in Waxman Markey will do exactly what Williams and Zabel suggest – it will set back any real solution by at least a decade. With its inevitable costs to the economy in the trillions of dollars and its failure to impact carbon emissions in a meaningful way, it will also essentially end all credibility that the environmental movement has to later advocate for real solutions.

Hopefully we can expect more of the Senate than the cynics in the House are apparently capable of.  Let’s hope we can expect them to treat us with the respect of at least trying to be honest and serious about this issue.

Instead of caving on this issue for political expedience, Tom Friedman, President Obama and everyone else seriously concerned about this issue need to stand up and call on the Senate to reject Waxman Markey completely and start over from scratch with a real solution like a straight forward carbon tax that puts a significant and inescapable price on carbon emissions right now.

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Waxman Markey – Greenwashing Corporate Welfare

May 24, 2009 By 8 Comments

As the Waxman Markey Carbon Cap and Trade bill winds its way through Congress, our government is finally about to take action on our unsustainable addiction to fossil fuels …….. Or so it would seem.

But we should be paying attention not to the rhetoric, but rather the realities of the legislation. What matters is not the pretty sound bites or the presumed good intentions of the supporters behind legislation, but rather the actual legislation itself. As always in the legislative sausage making process, “the devil is in the details”.

The current Waxman Markey legislation is another truly audacious handout to the Wall Street traders and speculators, and to the nation’s largest carbon emitters, the two groups who stand to benefit most from this legislation. And unfortunately, the political compromises that evolved to give carbon free offsets to refineries, utilities and other major polluters along with all the other give aways will render the overall cap and trade effort effectively useless in actually reducing carbon emissions, as the European system has already proven to be.

What is being proposed in this legislation is one of the world’s largest derivatives markets, with complex rules being made up in a mad rush and Wall Street lobbyists very heavily engaged in the rule making. US Commodities Future Trading Commissioner Bart Chilton is quoted by the Financial Times as predicting carbon markets would become ” the biggest of any derivatives product in the next four to five years.”

One would have hoped Congress learned something from the fiasco created by the derivatives market for subprime mortgages. Unfortunately it seems they haven’t. There is a very good reason that environmentalist organization Friends of the Earth titled their report on Cap & Trade “Subprime Carbon”. In a CNBC video on “The Carbon Challenge”, former Governor and DNC Chairman Howard Dean declares “I am terrified of a Bernie Madoff in the Cap and Trade business who is selling stuff that doesn’t exist”.

This legislation is evolving to be even worse than the Washington solutions for the economic crisis, a record of terrible public policy that I thought would be impossible to challenge. After looting our children’s future handing trillions of tax-payer dollars to the Wall Street firms most responsible for the worlds worst economic problems since the Great Depression, our leaders in Washington are now about to hand additional hundreds of billions of dollars in direct subsidies to the companies most responsible for carbon emissions.

President Obama’s proposal for Cap and Trade was for all allowances to be auctioned to the highest bidder and proceeds largely used to offset the impacts of higher energy costs to citizens, an inevitable near term reality of effective emissions policy. Though not as effective as a straight carbon tax, that would be decent policy. However instead of following the President’s guidance, Congress is now deciding to hand carbon allowances out for free to the industries that currently emit the most carbon.

The Wall Street Journal quotes the President saying just in March “If you’re giving away carbon permits for free, then basically you’re not really pricing the thing and it doesn’t work — or people can game the system in so many ways that it’s not creating the incentive structures that we’re looking for.” White House Budget Director Peter Orszag was even more clear in his March testimony to Congress: “If you didn’t auction the permit, it would represent the largest corporate welfare program that has ever been enacted in the history of the United States”.

Under Waxman Markey, eighty five percent of initial carbon allowances would be simply given away. Estimates are that those initial allowances could be worth hundreds of billions of dollars annually. This is a massive handout. Effectively, instead of rewarding utility companies and independent power producers who have led the utility industry in developing wind and other clean energy projects over the last decade, Congress is proposing to hand a large portion of these huge subsidies to their competitors who stuck with the dirtiest possible technology. In a report on Cap and Trade, the Congressional Budget Office has estimated that some of these companies could see their market capitalization double and triple almost instantly on the receipt of these free handouts. That’s not a bad reward for companies that maintained the worst emissions policies absolutely as long as possible.

As a real solution, rather than Cap and Trade, a straightforward carbon tax is favored by the vast majority of economists, as well as Greenpeace, Friends of the Earth, NDN, Tom Friedman, James Hansen, Paul Volker, Joseph Stiglitz, William Ruckelshaus, Al Gore, Ralph Nader and a huge majority of knowledgeable people on all sides of the political spectrum who have actually explored the issue. Energy Secretary Stephen Chu also favored a carbon tax up until his political appointment. A straightforward carbon tax is also favored by almost all business groups other than utilities and other polluters angling for massive free carbon credit handouts.

So the fundamental question is the one the New York Times asked: “How did cap and trade……. become the policy of choice in the debate over how to slow the heating of the planet? And how did it come to eclipse the idea of simply slapping a tax on energy consumption that befouls the public square or leaves the nation hostage to foreign oil producers?”

“The answer is not to be found in the study of economics or environmental science, but in the realm where most policy debates are ultimately settled: politics.”…………….

“[Cap and trade] is almost perfectly designed for the buying and selling of political support through the granting of valuable emissions permits to favor specific industries and even specific Congressional districts. That is precisely what is taking place now in the House Energy and Commerce Committee, which has used such concessions to patch together a Democratic majority to pass a far-reaching bill to regulate carbon emissions through a cap-and-trade plan.”

Bottom line, as Greg Mankiw, Harvard economist and author of the economics text book used in the majority of university economics courses points out: “Cap-and-trade = Carbon tax + Corporate welfare.”

We should also recognize that as part of the Waxman Markey deal, Congress will require state and regional emissions programs like the Regional Greenhouse Gas Initiative (RGGI), that were carefully designed and negotiated over years, will be put on hold for at least five years. It is truly unfortunate that just as the RGGI program is getting off the ground, it will be derailed in order to enable corrupt political shenanigans like this.

It is hard to imagine how congress can pretend to justify enriching the worst polluters in the country and entrenching their market positions with the massive handout now working its way through Congress.

As I argued here, it seems to me a far better response is to endorse the alternative bipartisan bill: H.R. 2380 The Raise Wages, Cut Carbon Act of 2009 which was recently introduced by Representatives Inglis, Flake and Lipinski.

The Miami Herald reports that that H.R. 2380 “would initially impose a tax of $15 a ton of carbon dioxide on the producers and distributors of gasoline, natural gas and coal, with the tax rising to $100 a ton over three decades. The tax increases would be offset by equivalent cuts in payroll taxes, with employers and employees sharing the reductions equally.”

Inglis, Flake and Lipinski calculate that under their bill, customers of coal fired utilities would see cost increases of 83.5 percent in the first year. They address that direct impact to consumers with an offset to the regressive payroll taxes that impact people and jobs most directly.

Unlike Waxman Markey, The Raise Wages, Cut Carbon Act is both rational and real market oriented legislation. The fundamental premise of the Inglis, Flake and Lipinski bill is to dependably and significantly reduce carbon emissions and realistically stimulate the economy and job growth – all with no net increase in taxes. Perhaps the details around the specific numbers should be debated more. But unlike Waxman Markey, the fundamental principle is sound environmental policy and sound economic policy. And at the very outset it is far more serious than Waxman Market in actually putting a real and very predictable price on carbon emission.

A meaningful carbon tax at the federal level coupled with encouraging ongoing experiments in Cap and Trade at the state and regional effort, like RGGI, would be a far more rational approach to these issues than the original Waxman Markey bill and certainly far more rational than the cynical counterproductive corruption that it has evolved into.

I find it disheartening when very knowledgeable leaders that I usually respect seem eager to accept an ineffective policy based on political expediency. My own idealism suggests that we should hold out for real solutions, less subject to manipulation and corruption. That idealism is born from very real experience of a project developer trying to build good projects in the face of the morass of unintended consequences coming out of the traditional cynical process of political horse trading.

Over the years, the environmental and clean energy communities have been comprised of very practical idealists. If we are to settle for lousy solutions merely because they are politically expedient when they in fact have no practical value, then we well on our way down the slippery slope and are just another part of the problem rather than part of any solution.

In “Is Cap and Trade a Dead Policy Walking?”, Robert Shapiro of the progressive think tank NDN suggests that “after Wall Street’s meltdown, the proposition for another round of the financial merry-go-round that produced the worst economic crisis in our lifetimes seems either very naive or very cynical”. He also suggests that “for years, many politicians and environmental leaders have believed that any kind of tax to deal with climate change would be dead on arrival. That may be changing, especially if the tax is paired up with rebates to take away much of its political sting. More importantly, the costs and lessons of the financial crisis may effectively swamp the prospects for cap-and-trade. If cap-and-trade has become a dead policy walking, those who care deeply about climate change will find that a carbon tax system has become the last, reasonable policy standing”.

In an article entitled “Coal, Electric Industries Big Winners in Climate Bill Deal” , the Washington Independent points out that organizations who signed on to support Waxman Markey just weeks ago are already pulling away as they see the problems with the emerging legislation: “Janet Keating, executive director of the West Virginia-based Ohio Valley Environmental Coalition, said in a statement Friday. “There are some costs that are too high to pay when it comes to the environment, clean air and clean water. We urge Congress to either fix the Waxman-Markey bill or dump it and start over.”"

In “Subprime Carbon: Environmentalists Warn About the Next Big Bubble” the Wall Street Journal suggests that “one possible side effect of the financial-market fallout and concerns about more toxic assets” is “growing support for a straight carbon tax, rather than a complicated cap-and-trade plan.”

Once we get the “economic externalities” of fossil fuels somewhat accounted for in the marketplace that everyone participates in, we will start making real progress. Rather than supporting Waxman Markey’s politically created markets in which only specialized elites can play, truly effective policy would be simple, understandable and implemented in a manner that is very direct and clear in the normal economy that everyone makes transactions within. A straight forward carbon tax is the most effective and efficient way to do that.

Waxman Markey will massively increase costs of electricity and other major carbon emitting processes, but instead of providing a mechanism for average people to cover those costs, the benefits are all being handed to the worst carbon polluters for free. What single policy could more effectively turn citizens and voters away from trusting anything labeled with an environmental agenda in the future? It is insanity.

Despite the rhetoric, Cap and trade is not market driven policy, won’t reduce carbon emission and will never create what any real alternative solutions to carbon emission actually need to be successful – predictability in the market place.

Unfortunately, it seems that Simon Johnson, the former Chief Economist of the International Monetary Fund may be right in his Atlantic article, “The Quite Coup”, regarding who is really running both political parties of our government these days. But Sen. Dick Durbin (D-Ill is exaggerating when he is widely quoted saying “The banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place”. Clearly the banks don’t own Congress outright. The utilities and oil companies also still have significant ownership and control of our government.

In a recent blog post entitled Then and Now, Harvard’s Greg Mankiw points out very conflicting realities:

“From a Obama-Biden campaign position paper:

Barack Obama and Joe Biden’s cap-and-trade system will require all pollution credits to be auctioned. A 100 percent auction ensures that all large corporate polluters pay for every ton of emissions they release, rather than giving these emission rights away for free to coal and oil companies.

From the Wall Street Journal: “Pollution Politics and the Climate-Bill Giveaway:

Under the House bill, only 15% of the emission permits will be auctioned initially. The rest of the permits will be given away — 2% to oil refiners, 5% to free-standing “merchant” coal plants, 9% to regulated natural-gas distributors, and so on.

Mankiw asks: “So, Mr President, the bill now being considered in Congress is in direct contradiction to your campaign pledge. Will you now please stand up for principle and issue a veto threat?”

Instead of defending their very clear and sensible positions of only a couple months ago, President Obama and Vice President Biden both praised the passage of Waxman Markey by the House Energy and Environment Committee.

If Congress and the President are not willing to stand up for principle and real solutions, then the rest of us have to demand they do.

Perhaps the main reason we should all support solutions that actually make sense is because citizens nationwide are becoming increasingly skeptical and cynical about government as a solution to anything at all. Anyone with doubts about that should just look at the results of the recent ballot initiatives in California. If we allow completely ineffective carbon legislation like the Waxman Markey bill to pass, that is really just another massive handout to Wall Street and other corporate political campaign contributors, it could be decades before voters allow Congress to attempt to do anything useful about all the problems associated with our fossil fuel addiction.

These issues are too important to settle for a feel good, green wash, ineffective pretense of a solution. Now is the time for the environmental and clean energy communities to unite with the general business community around a real solution far less subject to corruption.

Let’s find the courage to regain both our practicality and our idealism. Lets support something that not only makes environmental sense but also makes economic sense. Let’s demand Congress provide a real solution rather than selling out to the oligarchs that Simon Johnson describes. Their lobbyists are being very well served. Its time we all call our congressional representatives and senators and demand our voices be heard.

Lets demand very predictable and dependable higher levels of carbon taxes on those that should be taxed more instead of giving them massive corporate welfare. And lets demand real reductions in employment taxes to help put regular people back to work and help them pay for the increased costs of living that any meaningful carbon solution must inevitably entail.

Anyone actually paying attention knows it is past time to dump Waxman Markey and demand a real solution. Let’s join a very broad politically and economically sensible consensus and unite behind demanding passage of H.R. 2380 “The Raise Wages, Cut Carbon Act of 2009”.

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